Sam Bankman-Fried’s lawyers can’t stop making mistakes

At a glance

• The Defense team for Sam Bankman-Fried has repeatedly walked into hilarious mistakes.
• Judge Lewis Kaplan has constantly reprimanded Mark Cohen and Christian Everdell for wasting time.
• Is there a larger strategy behind what seems like mere ineptitude?

Sam Bankman-Fried’s white-shoe lawyers have a very hard job. They also seem to be doing it quite poorly.

Indeed, at their lowest moments, Mark Cohen and Christian Everdell are like the Laurel and Hardy of bad lawyering.

In the third week of trial, Bankman-Fried’s defense team has yet to establish any real counter-narrative to the prosecution’s case — but worse, they’ve made repeated, serious missteps that actually seemed more likely to harm SBF in the eyes of the jury than to help him.

One sterling example came on Thursday, October 12, as Cohen was cross-examining former BlockFi CEO Zac Prince about the due diligence process at the now-collapsed crypto lender. Cohen and Prince were reviewing a report from BlockFi’s risk team recommending against further lending to Alameda, in around August of 2021.

“So when an exception approval was included,” Cohen asked, “that meant the credit team doing the sort of on-the-ground work couldn’t say ‘yea’ or ‘nay’ to the loan, correct?”

“That’s one of the reasons, yes,” Prince affirmed.

“And it had to go up the chain of command.”

“Correct.”

“Ultimately to the executive committee, I believe you said,” Cohen continued. “And you were a member of that committee.”

It was just one exchange of several working to establish one thing: that Prince, in reviewing Alameda Research’s loan application, could override his own risk committee’s fears. Those included fears about things like the volatility of the FTT tokens Alameda was using as collateral.

Cohen was clearly gearing up for a bombshell revelation, a punchline that would discredit Prince and his testimony.

But that bombshell would turn out to be more of a lead balloon, its payload merely hot air.

Read more: Alameda Research used customer funds as early as 2019, Gary Wang testifies

No, this loan did not get made

The day before, on Wednesday, October 11, Prince had told the prosecution about his company’s loans to Alameda Research. Among other points, he’d also been clear that BlockFi would never have lent to Alameda if it had known about Alameda’s huge personal loans to FTX executives and its massive borrowing of FTX customer funds. It seemed clear evidence that Bankman-Fried and his inner circle had defrauded lenders.

On Thursday morning, Cohen needed to change the narrative. His questions seemed poised to nail Prince as the real culprit in BlockFi’s demise:  a CEO who overrode his own risk management department. Victim-blaming has been one of the defense’s major tactics so far. The implicit subtext is often something like “Only a complete rube would trust our client.”

Finally, after nearly an hour of lead-up, Cohen moved in for the killing blow:

“So the [risk] team is telling you and other executives, their recommendation is not to go forward … Now did in fact the loan get made?”

“This loan,” answered Prince, “No, this loan did not get made.”

If you listened closely, you could hear the ‘wah-wah’ of sad trombones on the wind.

Cohen’s big lead-up had fallen into a hole, seemingly because he had his basic facts wrong.  BlockFi did make more loans to Alameda after the rejected application, but only at higher collateralization levels, as Prince would go on to explain to Cohen.

Cohen had effectively spent almost an hour helping the prosecution rather than his client. Instead of painting Prince as a cowboy who took risks heedlessly and had only himself to blame for losing money to Alameda, he’d shown that Prince did carefully follow procedures. The only culprit left standing was the FTX inner circle who had doctored information on loan applications sent to BlockFi.

Bankman-Fried’s lawyers are hesitant and clumsy

This was just one particularly striking misstep from a defense that has made plenty in the course of the trial. They’re at a big disadvantage because of limiting rulings and witnesses rejected by Judge Lewis Kaplan (and, of course, because their client looks guilty as hell). But they’re not doing much with what they’ve been left.

When Cohen and Christian Everdell were first hired as Bankman-Fried’s defense team, that would have been nearly unthinkable. As the Wall Street Journal pointed out, they had some unsavory clients — most notably, Ghislaine Maxwell. But they were also elite: Both Cohen and Everdell are former Federal prosecutors, and Everdell is a graduate of Harvard. Cohen & Gresser, which Cohen co-founded, has a reported 80 lawyers with offices in New York, London, and Paris.

That led me to assume that these guys were the legal defense version of Harvey Keitel’s Wolf from Pulp Fiction. These two, circumstances implied, rolled in to defend the worst people for the biggest paychecks. Perhaps amoral but ruthlessly competent, forcefully defending their clients’ right to a vigorous defense while using every trick in the book to help alleged criminals walk free.

But the reality, so far, has seemed far grubbier, clumsier, and sadder than such cinematic imaginings would have it. Cohen and Everdell seemed squeamish about pushing hard on Caroline Ellison, who they were expected to tar as an irresponsible leader at Alameda. They’re hesitant, clumsy, mispronounce names, and constantly trip over technical details. Judge Lewis Kaplan has continuously fumed at the defense for spending long periods simply having witnesses re-state the answers already given to the prosecution. Kaplan has had to reprimand both Cohen and Everdell for, in effect, wasting time.

Time and again they’re rebuffed in their attempts to find daylight between their client and the, at best, catastrophic mismanagement of FTX and Alameda Research. They have frequently set up lines of questioning during cross-examination that didn’t just fizzle out but blew up spectacularly in their faces. All of that is almost certainly souring the jury against the lawyers. Even leaving aside the damning evidence on display, it may also be turning jurors against Bankman-Fried.

After three weeks in court, Cohen and Everdell seem less like shadowy super-lawyers, and more like the only even vaguely credible and competent option available to the likes of Ghislaine Maxwell and Sam Bankman-Fried.

Did Bankman-Fried buy a yacht?

Another slapstick moment came in Cohen’s opening-week cross-examination of former FTX engineer Adam Yedidia, who was close to the so-called ‘inner circle’ but not seemingly part of the conspiracy.

“Did you observe Mr. Bankman-Fried,” Cohen asked, “and how he spent his money in your day-to-day interactions with him? … He didn’t buy, for example, fancy watches, did he?”

“No,” Yedidia answered. 

“He didn’t buy a yacht, correct?

“To my knowledge, he did not buy himself a yacht.”

Cohen further went on to ask Yedidia whether Bankman-Fried wore fancy clothes or drove a fancy car. He tried to get Yedidia to specify that Bankman-Fried drove a Toyota Corolla. He showed a picture of Bankman-Fried onstage with Bill Clinton and Tony Blair, in his uniform of cargo shorts and a t-shirt.

The goal of this line of questioning was typical of the defense, in that it was superficial and flimsy. Cohen was working to imply to the jury that because he wasn’t making big personal expenditures, Bankman-Fried couldn’t be a crook. There is a further possible case to be made for his purported commitment to effective altruism, but the topic has barely come up at trial thus far.

By my count, Cohen’s rhetoric backfired in four ways.

First, Cohen caught a reprimand from Judge Kaplan for trying to push Yedidia to say Sam drove a Toyota Corolla specifically. Second, just days later Caroline Ellison would testify that Sam had returned a luxury car in favor of the Corolla, but only to help cynically burnish his effective altruist image. Third, showing a picture of Bankman-Fried on stage in shorts and a t-shirt with Bill Clinton, when Bankman-Fried is also implicated in various forms of influence-peddling, seems shortsighted.

But the fourth devastating counterpunch came when the prosecution returned for redirect, their chance to briefly rebut the defense’s cross-examination of Yedidia. Redirect came from AUSA Danielle Sassoon, whose precise, rapid-fire questioning has been a welcome contrast to Cohen and Everdell’s dithering.

“You were asked some questions on cross-examination about the defendant’s spending,” Sassoon began. “What was the FTX Arena?”

A wave of uproarious laughter ripped through reporters and other onlookers, who knew what was coming. (I was sitting in the overflow viewing room that day, where standards of behavior are a bit looser than in the courtroom proper.)

FTX Arena, of course, was the Miami Heat venue renamed for FTX in 2021. “As I recall, [the deal] was about a hundred million dollars,” said Yedidia (it was actually $135 million).

In the two weeks since, the prosecution has excelled in showing that Bankman-Fried spent FTX customer money with wild abandon, on everything from venture capital investments to hiring celebrities to planning a massive HQ building that never happened. Bankman-Fried frequently overrode his lieutenants’ fiscal worries even after he was well aware that funds were missing from the exchange. The defense has spent almost no further effort, much less made any progress, on portraying Bankman-Fried as in any way a modest spender.

Read more: Sam Bankman-Fried’s parents show signs of stress as defense flounders

You’ve tried the best, now try the rest

Bankman-Fried’s defense team also frequently struggles with basic precision. Cohen in particular seems to have a tenuous grasp on some of the terminology he’s putting to witnesses, leading to many truly head-scratching and pointless back-and-forths. In one instance, just before his big faceplant with Zac Prince, Cohen seemed to confuse a “top 10” cryptocurrency by market cap with “the top 10 percent” of cryptocurrencies. The confusion ate up several minutes of court time and almost two pages of the 180-page court transcript.

This certainly suggests that the team is simply failing because they’re ill-prepared. But given their pedigree, it’s hard to accept such a simple explanation for their decidedly underwhelming performance so far. It’s tempting to impute some three-dimensional chess to anyone with ‘Harvard’ next to their name.

For instance, maybe Cohen and Everdell are wasting time on purpose. Maybe they think boring and confusing the jury is their best bet. Another hypothetical would be that they’re intentionally antagonizing Judge Kaplan to set up grounds for an appeal — and to be fair, Kaplan does seem to be cutting them absolutely no slack. Maybe there is some other strategy here that just looks like incompetence to novice legal observers.

That would mean they’ve given up on influencing their primary audience, the jury. The jury, remember, is made up of regular folks, who neither know nor care about the niceties of legal procedure. They care about a coherent story and intuitive trust. The verdict will hinge far more on vibes than procedure, and seeing SBF’s lawyers stumble so badly can only turn them more against him.

But there is one more possible explanation, at least for some of their flubs, hinted at in the exchange with Yedidia about the Toyota Corolla. Had they known the real story of the Corolla, they would have been less likely to bring it up. 

That strongly implies they were never told the real story by Bankman-Fried, or by his parents. There is strong evidence that Sam, Barbara, and Joe are all deep in the throes of denial and delusion about what happened. They might not be giving their lawyers the facts they need to build a convincing defense. They may even be misleading their own team into embarrassing traps.

Or maybe Cohen and Everdell are simply less impressive than advertised.

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